US Stocks Held Down By Mixed Signals From Consumer Spending

PeterA. McKay

Mixed signals about U.S. consumers' ability to spend kept U.S. stocks in check Friday, but the technology sector benefited from upbeat remarks from two of its bellwethers.

The Dow Jones Industrial Average opened a little higher but recently retreated to trade down 60 points, or 0.6%, at 9520.73, on pace to snap an eight-day winning streak. Still, a recent string of gains has pushed the Dow into the black for August, up 4.5% for the month coming into Friday's action and on track for a second consecutive monthly gain.

Other major indexes were also lower. The S&P 500 was off 0.5% at 1025.75, hurt by declines in its health-care and consumer categories, while its technology sector was up 0.2%. The technology-focused Nasdaq Composite Index was down 0.2%.

Intel, a component of all three big-name market yardsticks, rose 4% after the chipmaker boosted its third-quarter sales forecast, citing "stronger-than-expected" demand.

Intel's comments are often considered an indicator of demand for an array of electronic devices that use chips as basic components.

Computer maker Dell also posted a solid rally, up 2.4% despite its report that fiscal second-quarter profit fell 23%. The results nevertheless topped Wall Street expectations and the company offered an encouraging outlook for the second half of the year.

Big-picture economic data on Friday painted a murkier picture of the consumer's health.

The latest Reuters/University of Michigan reading of consumer sentiment slipped to 65.7 this month, down from 66 .0 in July. New data from the Commerce Department showed that consumer spending rose mildly in July, but personal income was unchanged.

The recent stock rally has been fueled by improved economic data and rising risk appetite. But many investors have stayed on the sidelines or maintained some defensive bets in their portfolios, which continued on Friday.

"We're still trying to judge what a normalized economy will look like," with the late stages of the financial crisis still playing out, said Stephen A. Lieber, chief investment officer at Alpine Mutual Funds in Purchase, N.Y..

Commodity prices rose Friday morning. Oil futures were recently up 65 cents, trading at $73.14 a barrel in New York. Gold contracts were up more than $3, trading just shy of $950 per troy ounce. The broad Dow Jones-UBS Commodity Index was up 0.9%.

The dollar strengthened against major rivals. One euro cost $1.4348, down from $1.4359 late Thursday. One dollar fetched 93.53 Japanese yen, down from 93.50 yen.

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